- The Washington Times - Friday, October 12, 2001

Marti Davis doesn't shop for much of anything but necessities these days. Like many other Americans, she has been fixated and upset for weeks by the Sept. 11 attacks.
"It's like going through a grieving process" it will take time for most people to gradually get back to normal even if they weren't personally hit by the attacks she said. "The first week, we didn't even go out to eat. We sat glued to the TV. I finally had to turn the TV off to get anything done."
Now, the Frederick, Md., resident is shopping only for things she can't do without. "And I love to shop," she said. The drop in shopping for luxuries and big-ticket items has been noticeable at the Neiman-Marcus in Chevy Chase, where Mrs. Davis works. The luxury department store group had to scale back orders for new merchandise because of a 19.5 percent sales slump last month.
In fact, Americans' shopping hiatus after the attacks made last month the worst in 30 years for September sales at chain stores nationwide. Since consumer spending fuels about two-thirds of economic activity, it is the reason many economists believe the economy has slipped into recession.
The only stores that saw an increase in sales after the attacks were discounters like Wal-Mart, as consumers focused on saving money while buying basic goods like food, fuel and clothing, according to the Bank of Tokyo-Mitsubishi Ltd., which tracks sales at 80 large U.S. chains.
In a measure of how dramatically the attacks hit retailers, sales actually plummeted by 2 percent at stores nationwide if the 6.3 percent gain posted by Wal-Mart the biggest retailer were excluded, the bank said. Including Wal-Mart, sales at stores open at least a year posted an anemic 0.8 percent gain over a year earlier the worst since 1971.
The lingering threat of more terrorist attacks highlighted again yesterday by an alert put out by the FBI has prompted David Lesz of McLean to rule out making any more big-ticket purchases. He is waiting to see what the economic fallout from the war on terrorists will be.
"There's a lot of uncertainty," he said. "The economy's already been hit by the terrorists. If there's another attack, that could cause a panic and constrict the economy further."
Neither Mr. Lesz nor Mrs. Davis is holding back because of worries about losing their jobs, although many other consumers say they have been spooked by announcements about the loss of more than 200,000 jobs in the wake of the attacks. It's more a sense of anxiety and uncertainty about what the future holds that makes them pause.
Many consumers have not hit the malls simply because they have been transfixed watching the attacks and ensuing developments like the war in Afghanistan on television. A similar fixation with staying home and watching war developments occurred during the Persian Gulf crisis in 1990. It is widely blamed for helping usher in the 1990-91 recession.
The latest example of consumer mesmerization with the news dubbed the "CNN effect" by economists came Sunday, when the bombing in Afghanistan began. Retailers around Washington say they noticed a sharp drop in traffic and sales after the early afternoon announcement.
"Everybody went home and watched TV," said Jason Wesley, a sales assistant at Williams Sonoma, a gourmet food and kitchenware store at the Mazza Gallerie. But even though many consumers have been shunning luxury goods, sales at Williams Sonoma generally have held up well since the attacks, she said, thanks to consumers' new-found penchant for staying in and cooking at home.
"People want to be comfortable," she said, noting that sales of spiced breads and cider, pasta and other comfort foods as well as the implements needed to fix them, such as waffle irons and gingerbread molds have been soaring.
"They're not buying $100 champagne glasses. They want something the family can do together," like making bread, she said.
The urge to nest also sent sales surging by 18 percent last month at Michaels Stores Inc., a crafts retailer.
Some consumers say they haven't been fazed by the attacks and are still venturing out as much as they always did.
Rowhaya Van Der Mei of Chevy Chase said she and her husband bought a house the day after the terrorist strikes and are planning to spend a good deal of money updating the kitchen and bathrooms and buying new furnishings in the weeks ahead.
"I am optimistic. My husband is a banker and stock trader and can afford anything. I know we will never be out of a job," she said. "People have to get on with their lives, you know."
For the most part, consumers are increasingly cautious and prone to bargain-hunting, however, deepening a trend that emerged even before the attacks as a result of rising unemployment, economists say.
"Last month, consumers turned almost exclusively to discounters for their purchases," said Andy Kish, analyst with Economy.com, noting that wholesale clubs like Costco and discount retailers like Best Buy managed to post 5 percent and 4.2 percent sales gains, respectively, last month while high-end department stores like Macy's and Bloomingdale's saw double-digit declines.
Hardest hit were sellers of footwear, clothing, furniture and electronics. Spending will continue to be anemic, he said, "as long as consumer concerns about terrorism and a weak economy remain."

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